Japanese government bonds held steady, with yields not far above record lows hit last week as the government on Friday gave its official nod to a new Bank of Japan leadership that is expected to proceed with aggressive monetary easing. The 20-year sector, which sagged in the previous session after a lacklustre auction of those bonds recouped some of their losses.
Japan's parliament approved Haruhiko Kuroda to take the helm of the BoJ, as well as nominees Kikuo Iwata and Hiroshi Nakaso to be Kuroda's deputies. "It will be interesting to watch Kuroda and Iwata trying to prove what they have been arguing for years, that if you buy enough bonds, Japan can escape deflation," said Neale Vincent, strategist at Nomura Securities in Tokyo.
The BoJ is now constrained by its so-called "banknote rule," which limits its longer-term JGB holdings to the amount of outstanding banknotes. The rule was established in March 2001, when the BoJ embarked on its earlier round of quantitative easing. The 10-year yield was flat at 0.620 percent, holding above a low of 0.585 percent hit last week, which was its lowest since June 2003. Ten-year JGB futures rose 0.02 point to end at 145.19, within sight of their all-time record high of 145.50 struck one week ago. The 20-year yield slipped 1 basis point to 1.610 percent, while the 30-year bond yield lost half a basis point to 1.765 percent.